The new Gold Rush for geolocation services is hot and for good reason. But will the risk of being scorched be worth the rewards?

Geolocation is more than just the tech buzzword of the year. Location relevance bridges the gap between virtual and real-life social interactions and is a critical step in the evolution search and social networking.

For users, a whole new world of opportunity will open up around them when all of the new, location-specific data can be accessed, filtered, personalized and organized. For marketers, this contextual information is considered the Holy Grail of data as they try to get the right message to the right people at the right time.

Legions of companies are hurdling towards implementing location services so they can cash in including: Foursquare, Gowalla, Twitter, Yahoo, Google and now Facebook (the category killer). Geolocation services are undoubtedly the biggest and most disruptive web trend in 2010, and dramatic growth is projected as more and more people switch to multifunctional smart phones.

However, for many people, these services still either don’t make sense or are a little too creepy. Even worse, if used without the proper safeguards, these services could create real-life disasters. Greater functionality, in this case, brings greater risks and users are understandably concerned. A study by Webroot.com revealed:

55 percent of those that use geolocation tools are worried about their loss of privacy

45 percent worried that details about their location could be used by potential burglars

49 percent of women are highly concerned about letting a stalker know where they are

These finding are just scratching the surface of potential privacy pitfalls and the option of hiding your whereabouts from others defeats the purpose of geolocation. What’s the answer? You have to use common sense and make sensible decisions about how widely you share your status and how carefully you guard your privacy settings.

Privacy concerns have taken center stage but this is not just about geolocation. It’s about information sharing in general. Facebook’s privacy blunders are a case in point. The stakes are high and ultimately the market will demand new security and privacy standards giving users a variety of new ways to easily cloak their location while limiting access to that information.

Clearly, there are big hurdles to clear before geolocation services will gain widespread acceptance and get the necessary scale to become the next “big thing”. But as the technological barriers come down and privacy concerns are dealt with people will increasingly use their phones on-the-go to access personalized location-based content because the benefits will far outweigh the risks.

Geolocation is the next level of internet customization. Our phones will be used as a central hub and personal beacon that will provide a whole host of new personalized services and enable us to connect to and explore the real world like never before. As Marketers, we need to embrace it and start getting familiar with the technology, because because before long if it’s not a part of your marketing mix, it will most likely be a part of your competitors. Regardless of the concerns, as the mobile internet continues to grow, so geolocation will grow with it. It’s here to stay, it will be big and it knows where to find you.

Some spot on thinking here Steve; I’m excited about some of the hyper-local capabilities that this will give to smaller businesses. I’m hopeful that Facebook and some of the others get it right…too much at stake.

James, you’re exactly right. SMB’s are a huge opportunity here. If Facebook gets it right scale arrives quickly and location-based data will have real value. But it’s essential that these privacy concerns are dealt with so that data is accessible.

It’s also inevitable that new, location-based platforms will emerge. New break-through ideas that will shake things up – we haven’t begun to scratch the surface. Very exciting indeed.